News

In December 2020, as part of the larger National Defense Authorization Act, the Corporate Transparency Act (CTA)) was enacted with intentions of increasing transparency into companies to combat money laundering and criminal behavior. The CTA requires that certain companies (each a “reporting company”) disclose their ultimate beneficial ownership and control. If not exempt, all new entities and all existing entities will need to comply with these new regulations. Though the CTA is not effective immediately, the Treasury Department expects within one year to issue the regulations detailing how the act will be implemented.

On October 7, 2020, the Securities and Exchange Commission (SEC) published a rule proposal to provide a safe harbor exemption permitting an individual acting as an unregistered broker or dealer, or “finder,” to engage in capital-raising activities on behalf of smaller private companies without registering as a broker-dealer. The SEC’s proposal (Release No. 34-90112; File No. S7-13-20) aims to address concerns that have been raised by small businesses when attempting to identify “finders” to engage potential investors while raising capital. In today’s capital markets, the SEC has not previously recognized a “finders” exemption or exception, nor has the SEC provided general guidance on “finders”, other than interpretive positions taken by the SEC staff in no-action letters, prompting some to observers to refer to the use of finders as the “gray market.”

The Paycheck Protection Program (PPP) has been extended and expanded to provide more funding for first-time borrowers and to allow some existing borrowers the opportunity to receive additional help. The Economic Aid Act, which become law late last year, allocates $284 billion in additional funds to the program and authorizes the Small Business Administration (SBA) to guarantee loans through March 31, 2021. On January 6, 2021, the SBA provided guidance in the form of Interim Final Rules (First Draw IFR) (Second Draw (IFR) to address eligibility and applications to the expanded program.

Congress’s most recent COVID-19 relief bill was signed into law on Sunday, Dec. 27, 2020, as the Consolidated Appropriation Act of 2021 (CAA). Title X of the CAA provides additional bankruptcy relief for individual and corporate debtors, as well as creditors impacted by COVID-19. Most changes are temporary as noted below.

The Business and Commercial Services office of the Arkansas Secretary of State (AR SOS) will be closed beginning at noon on December 30, 2020 and will not reopen until January 4, 2021. Any company wishing to dissolve before the end of the year must do so prior to noon on December 30, 2020.

On October 30th, the Federal Reserve Board announced two adjustments to the terms of its Main Street Lending Program. These changes are designed to better provide support to smaller for-profit businesses and nonprofit organizations.

On August 24, the U.S. Small Business Administration (SBA) released a new interim final rule regarding the Paycheck Protection Program (PPP). This new interim final rule provides additional guidance on the applicability of owner compensation rules and the eligibility of certain nonpayroll costs for forgiveness.